Regulation Watch

Regulation Watch is a resource aimed at providing our members with updates on the activity of the sector's regulators, highlighting areas of specific interest. 

Recommended:

Regulatory Priorities for Retail Banking: a thought provoking speech by Katrina McTeague, FCA Director of Retail Banking Supervision in which she discusses the need for increased competition and how this will benefit consumers. 

RoboAdvice - an FCA perspective: A useful overview of the FCA's current line of thinking on Robo Advice given by Bob Ferguson, Head of Department, Strategy & Competition Division. 

Recent News

Open Banking effective 13th January 2018: As you may recall, in August 2016 the Competition and Markets Authority published its final report on its retail banking investigation. A key remedy resulting from this was for the UK's nine largest account providers to make, with customer consent, key data available to authorised third parties. On 13th January, this requirement came into effect. However, five of the banks have been granted until March 2018 to meet the requirement. Deatils about the launch of Open Banking can be found on the Open Banking Implementation Entity's website. The timing of this coincides with those coming into effect under the Second Payment Services Directive [PSD2]. A useful guide to the difference can be found on the Payments UK website [in 2017 Payments UK became part of the new trade association UK Finance. 
 
Senior Manager & Certification Regime (SMCR): A further consultation paper [CP17/40] was published in December 2017 with further proposals for the extension of the SMCR to all FS regulated firms. A further paper outlines propsals to extend the Duty of Responsibility rules [CP17/42]. Click here to read our response to the same proposals when applied to banking last year.  The PRA has also published a consultation [CP28/17]. Amongst other proposals, it sets out plans to amend gender references in its documents including the removal of the term 'grnadfathering' which will be replaced by 'conversion'.
 
FCA Future Approach to ... : In December, and in line with its Mission, the FCA published a further two 'Approach' documents to accompany the Aproach to Consumers published earlier and which closes to responses on 5th February [for more details click here]. These are the Approach to Authorisation which looks at how the FCA uses the authorisation process to prevent harm occuring; and the Approach to Competition which looks at how the FCA keeps entry to market open, monitors potential causes of harm/risks and the ways  the regulator can assist in making it easier for consumers to switch from supplier to supplier. Both include consultation questions for which responses are requested by 12th March.
 
We are in the process of finalising our response to the Banking Standards Board (BSB) consultation on 'What do good outcomes look like for banking customers'. The BSB seeks to develop a 'Consumer framework' which will allow it to consider further guidance to banks to achieve better outcomes for their customers. The BSB is also hoping to engage through this work with consumer and civil society organisations. Details can be found here.
 
Information About Current Account Services: The FCA was tasked with investigating and implementing additional information following the CMA Retail Banking Market investigation which reported in Autumn 2016. CP17/24 proposed a number of metrics designed to help consumers form meaningful comparisons between providers but none which highlighted committment to a cultue of professionalism. Our response challenged the FCA on this point and can be read here. Although some amendments to the proposals have been made, it was made clear in the Policy Statement [PS17/26], released in Decmeber 2017, that no additional metrics would be added at this stage. We will continue to argue the case in this matter at all relevant opportunities.
 
Financial Advice Market Review [FAMR]: The FCA has published its Policy Statement on changes coming into effect from 3rd January 2018. Amongst these are changes to the Handbook to align with the change in definition of advice, including a relaxing of the TC requirements for those giving information and guidance on retail investment products. We believe this move is incompatible with the established approach of holding firms to standards which ensured that clients were dealing with qualified professionals and will continue to raise this matter. Click here to see our FAMR update.
 
FCA CP17/43 Credit Card market study: This follows on from an earlier paper CP17/10 which made proposals to address persistent credit card debt and require credit card firms to use their data to identify customers at risk of financial difficulties.  It also set out details of an industry voluntary agreement to give customers more control over credit limit increases. Much of the feedback to those proposals was positive, with the exception of the costs to business which are revised here.
 
The FCA also released a paper summarising the issues and ideas raised by participants in rounadtable held in Autumn 2017. The regulator proposes to use these viewpoints to explore the issues further and identify opportunities for increasing access to alternatives. A consultation paper is expected in Spring 2018. To read the Summary follow this link
 
Innovation: The FCA has also published a report outlining lessons learned during the first year of its regulatory sandbox.  The sandbox allows firms to test innovative products, services or business models in a live market environment, while ensuring that appropriate protections are in place. Read more here.
 
FCA Strategic Review of Retail Banking Business models [not to be confused with the work by the CMA - read our note]. Launched in May 2017, the specific objectives of the FCA review are to:
  • understand retail banking business models in greater depth
  • understand how free-if-in-credit banking is paid for
  • understand the impact of changes such as increased use of digital channels and reduced branch usage on business models 

The review will encompass retail banks, building societies and credit unions and focus is on business models and what conduct/competition concerns these models may create. The FCA has published its Purpose and Scope but no further update is expected until Q2 2018. Full details can be viewed here

Live and Local to check if the FCA are running any events, in your area on a topic of interest follow this link to their website

 

FCA Consumer Approach thmb
FCA Future Approach to Consumers

 

FCA Financial Lives Survey

FCA 2017 Financial Lives Survey

 

FCA review of Banking Models

FCA Strategic Review of Retail Banking Business Models